Drop in Inflation decreases probability of BOE Rate hike (Daniel Johnson)

Is a rate hike in May by the BOE still likely?

Yesterday we saw the release of Consumer Price Index (CPI) data. CPI is a key measure of inflation and there was a fall to 2.5%. In order to have a healthy economy it is important that average wage growth be close to parity with inflation and this is currently the case, with average wage growth (2.8%) currently sitting above inflation. Although this could be seen as very positive, could it be considered a danger that people are making more money but are not willing to spend it?

Also if inflation in coming into line with the Bank of England’s (BOE) 2% target, could this put the potential rate hike in May on hold?

This is the concern and this is the reason we saw Sterling fall in value yesterday. I am of the opinion a rate hike will still take place due to previous strong economic data. Although Retail sales data to be released this morning could change that. There is expected to be a fall from 0.8% to – 0.5%. I would be surprised to see it the predicted – 0.5% so this could indeed strengthen the pound if there is only a slight decline. If it falls below -0.5% however this could indeed really put a rate hike in May in question.

If you have a currency requirement I will be happy to assist. It is crucial to be in touch with an experienced broker when the market is currently so hard to predict. If you let me know the details of your trade I will endeavour to produce a free trading strategy to suit your individual needs. Have faith knowing you will be dealing with a brokerage in business for over 16yrs, Foreign Currency Direct Plc. We are a no risk entity as we do not speculate on the market and we are registered with the FCA. If you have a currency provider take a minute to send over the rates they offer and I am confident I can demonstrate a significant saving.  I can be contacted at dcj@currencies.co.uk . (Daniel Johnson) Thank you for reading.

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